AUG 2 11981

ENERGY RESOURCES CONSERVATION BOARD

Calgary Alberta

Informational Letter
IL 81-23

To: All Operators

DRILLING SPACING UNIT AND TARGET AREA REQUIREMENTS

The Board has recently issued Decision Report 81-20 with respect to
drilling spacing unit and target area requirements for the Province
of Alberta. Board Order SU 1088 attached, implements changes
resulting from the Board's decision. The changes will be effective
on September 1, 1981. This Informational Letter is to assist in the
understanding of the Board's policy with respect to licences recently
issued, licence applications currently before the Board, or those
which may be filed between this date and September 1, 1981. Regarding
these matters, the following general rules will apply:

1 For any issued licence where drilling will have commenced
as of the effective date of the attached SU order,
September 1, 1981, and where the well was on-target in
accordance with the existing spacing regulations when the
well was spudded, the well is automatically deemed to be
on-target in accordance with section 4.070(10) of the
Oil and Gas Conservation Regulations.

2 For any issued licence where drilling will not have commenced
as of September 1, 1981, but where the location is on-target
in accordance with the new corner target areas described in
the attached SU order, no change in the status of the licence
takes place and drilling can commence and proceed in accordance
with the terms of the licence.

3 For any issued licence where drilling will not have commenced
as of September 1, 1981, and where the location was on-target
at the time of licensing but is off-target in accordance with
the new SU order, the licensee is cautioned that if the well
is drilled after September 1, 1981, it will be off-target.
Any applicable penalty would apply unless an appropriate
application is made to the Board and the off-target status

is remedied as a result of that application. Respecting
licences of this type which now exist, the licensee may wish
to consider an amendment to its licence which would alter the
location of the intended well to make it on-target with respect
to the new SU order.

2

4 Where a licence has been applied for as of the date of this
Informational Letter but has not been issued, whether the
proposed location would be on-target or off-target in
accordance with the new province-wide target provisions,
the Board will not continue with the processing of the
application until it has received further information

from the applicant for the well licence. The information
must show whether the applicant wishes to have the processing
of his application continue, since it is anticipated that a
number of applications where the proposed location would be
off -target in accordance with the new spacing would be with-
drawn or amended. Where the licence applicant indicates to
the Board that it wishes to have the consideration of its
application continue, the information should indicate that
the landowner is aware of the pending change in target areas
and remains satisfied with respect to the proposed location.
To assist applicants in dealing with these licence applications
where decisions are pending, the Board will be sending in the
next few days, individual letters to each such applicants
listing those well licence applications where further processing
is being delayed pending additional advice from the applicant.

5 All well licence applications filed after the date of this
Informational Letter and prior to September 1, 1981, must
include, in addition to the normal requirements of a well
licence application, an indication from the applicant that
the landowner is aware of the pending change in target areas.

6 All well licence applications filed after the effective date
of the new SU order, September 1, 1981, will be processed in
the normal manner, having regard for the changed target area
provisions as set out in the new SU order.

Any questions concerning the above may be directed to the well licensing
section of the Development Department.

Dated at Calgary, Alberta, on the 11th day of August 1981.

THE PROVINCE OF ALBERTA

THE OIL AND GAS CONSERVATION ACT
ENERGY RESOURCES CONSERVATION BOARD

ORDER NO. SU 1088

An order prescribing drilling spacing units
and target areas in the
Province of Alberta

The Energy Resources Conservation Board, pursuant to
The Oil and Gas Conservation Act, being chapter 267 of the
Revised Statutes of Alberta, 1970, hereby orders as follows:

1. This order applies to wells drilled or to be drilled
in that area of Alberta lying within the white and yellow
areas as described in Figure 1 which are not within currently
declared oil pools as defined and described by Board G Orders
on August 1, 1981, and listed in Appendix A or subject to any
other spacing orders.

2. Any well drilled or being drilled, outside a target
area designated by this order, but on target before
September 1, 1981, shall continue to be on target.

3. Notwithstanding section 4.020, subsections (1), (2)
and (3) of the Oil and Gas Conservation Regulations, the
target area for wells drilled after September 1, 1981, shall
be in accordance with the following:

(1) Where the prescribed drilling spacing unit
consists of one section, the primary and secondary target
areas shall be within the spacing unit and shall consist of

(a)

Primary Target Area - the North-east
quadrant of Legal Subdivision 6, and

- 2 -

(b) Secondary Target Area - the remainder of
the normal target area in accordance with
section 4.020, subsection (3) of the Oil
and Gas Conservation Regulations.

(2) Where the prescribed drilling spacing unit
consists of one half section, the primary and secondary targe
areas shall be within the spacing unit and shall consist of

(a) Primary Target Area - the North-east
quadrant of Legal Subdivision 6 or Legal
Subdivision 16, and

(b) Secondary Target Area - the West half and
South-east quadrant of Legal Subdivision 6
or Legal Subdivision 16, as shown and
marked 1 on Appendix B hereto attached.

(3) Where the prescribed drilling spacing unit
consists of one quarter section, the primary and secondary
target areas shall be within the spacing unit and shall
consist of

(a) Primary Target Area - the North-east
quadrant of Legal Subdivision 6, 8, 14 or
16 , and

(b) Secondary Target Area - the West half and
South-east quadrant of Legal Subdivision 6
8, 14 or 16 as shown and marked 1 on
Appendix C hereto attached.

(4) Where the prescribed drilling spacing unit
consists of two legal subdivisions, the target area shall be
within the drilling spacing unit and shall consist of the
North-west quarter of the legal subdivision designated in the
subsisting spacing unit order to contain the target area, as
shown and marked 1 on Appendix D hereto attached.

(5) Where the prescribed drilling spacing unit
consists of one legal subdivision, the target area shall be
within the spacing unit and shall consist of the North-west
quarter of the legal subdivision, as shown and marked 1 on
Appendix E hereto attached.

- 3 -

4. For the purpose of this order, legal subdivisions
shall be divided into quarters by lines shown as follows:

(1) Each East-West line shall be parallel to the
South boundary of the section containing the legal subdivi-
sion and shall pass through a point on the East boundary of
Legal Subdivision 1, 8, 9 or 16, 200 metres from the South-
east corner of the legal subdivision.

(2) Each North-South line shall be parallel to the
East boundary of the section containing the legal subdivision
and shall pass through a point on the South boundary of Legal
Subdivision 1, 2 , 3 or 4 of the section, 200 metres West of
the South-east corner of Legal Subdivision 1, 2, 3 or 4.

5. Where the drilling spacing unit of a gas well is one
section and the well is completed outside its primary and
secondary target area its annual allowable shall be reduced
by application of the allowable multiplier calculated in
accordance with section 4.070, subsection (2) of the Oil and
Gas Conservation Regulations.

6. Where the drilling spacing unit established is one
half section, and the well is completed outside its primary
and secondary target area its base allowable or in the case
of a gas well, its annual allowable, shall be reduced by
application of the factor equivalent to the ratio of the
area

(a) if the well is completed within the drilling
spacing unit and within the North-west quarter
of the legal subdivision North, South, East or
West of the legal subdivision containing the
target area and separated from it by one
intervening legal subdivision, 0.50 times the
area of the drilling spacing unit, as shown and
marked 2 on Appendix B hereto attached, or

(b) if the well is completed within the drilling
spacing unit and within the South-east, South,
West or North-west quarter of the legal
subdivision North, South, East or West of the
legal subdivision containing the target area and
separated from it by one intervening legal
subdivision, 0,375 times the area of the
drilling spacing unit plus four times the
product of the perpendicular distances from the

- 4 -

uppermost point of intersection of the wellbore
with the oil productive or gas productive part,
as the case may be, of the producing pool to the
two nearest boundries of the legal subdivision in
which the well is completed, as shown and marked
3 on Appendix B hereto attached, or

(c) if the well is completed within the drilling
spacing unit and within

(i) the North-west quarter of the legal
subdivision immediately North-east,
North-west, South-east or South-west of the
legal subdivision containing the target
area , or

(ii) the North-west quarter of a legal

subdivision North, South, East or West of a
legal subdivision defined in subclause (i)
and separated from it by one intervening
legal subdivision,

0.25 times the area of the drilling spacing
unit, as shown and marked 4 on Appendix B
hereto attached, or

(d) if the well is completed within the drilling
spacing unit and within the South-east,
South-west or North-east quarter of

(i) a legal subdivision immediately North-east,
North-west, South-east or South-west of the
legal subdivision containing the target
area, or

(ii) a legal subdivision North, South, East or
West of a legal subdivision defined in
subclause (i) and separated from it by one
intervening legal subdivision,

0.125 times the area of the drilling spacing
unit plus four times the product of the
perpendicular distances from the uppermost
point of intersection of the wellbore with the
oil productive or gas productive part, as the
case may be, of the producing pool to the two
nearest boundaries of the legal subdivision in

- 5 -

which the well is completed, as shown and marked
5 on Appendix B hereto attached, or ,^

(e) if the well is completed within the drilling
spacing unit and within the North-west quarter
of an odd numbered legal subdivision, 0.125
times the area of the drilling spacing unit, as
shown and marked 6 on Appendix B hereto
attached, or

(f) if the well is completed within the drilling
spacing unit and within the South-west,
South-east or North-east quarter of an odd
numbered legal subdivision, four times the
product of the perpendicular distances from the
uppermost point of intersection of the wellbore
with the oil productive or gas productive part,
as the case may be, of the producing pool to the
two nearest boundaries of the legal subdivision
in which the well is completed, as shown and
marked 7 on Appendix B hereto attached.

to the area of the drilling spacing unit.

7. Where the drilling spacing unit established is one
quarter section, and the well is completed outside its target
area, Its base allowable or in the case of a gas well, its
annual allowable, shall be reduced by application of the
factor equivalent to the ratio of the area,

(a) if the well is completed within the quarter
section and within the North-west quarter of
the legal subdivision diagonally opposite the
legal subdivision designated as the target
area, 0.5 times the area of the drilling
spacing unit, as shown and marked 2 on Appendix
C hereto attached, or

(b) if the well is completed within the quarter

section and within the South-east, South-west
or North-east quarters of the legal subdivision
diagonally opposite the legal subdivision
designated as the target area, 0.25 times the
area of the drilling spacing unit plus four
times the product of the perpendicular
distances from the uppermost point of
intersection of the wellbore with the oil

- 6 -

productive or gas productive part, as the case
may be, of the producing pool to the two
nearest boundaries of the legal subdivision in
which the well is completed, as shown and
marked 3 on Appendix C hereto attached, or

(c) if the well is completed within the quarter
section and within the North-west quarter of
the legal subdivision laterally adjoining the
legal subdivision designated as the target area,
0.25 times the area of the drilling spacing
unit, as shown and marked 4 on Appendix C
hereto attached, or

(d) if the well is completed within the quarter
section and within the South-east, South-west
or North-east quarter of the legal subdivision
laterally adjoining the legal subdivision
designated as the target area, four times the
product of the perpendicular distances from the
uppermost point of intersection of the wellbore
with the oil productive or gas productive part,
as the case may be, of the producing pool to the
two nearest boundaries of the legal subdivision
in which the well is completed, as shown and
marked 5 on Appendix C hereto attached,

to the area of the drilling spacing unit.

8. Where the drilling spacing unit established is two
legal subdivisions, and the well is completed outside its
target area, its base allowable or in the case of a gas well,
its annual allowable, shall be reduced by application of the
factor equivalent to the ratio of the area

(a) if the well is completed within the South-east,
South-west or North-east quarter of the legal
subdivision containing the target area, 0.50
times the area of the drilling spacing unit
plus four times the product of the
perpendicular distances from the uppermost
point of intersection of the wellbore with the
oil productive or gas productive part, as the
case may be, of the producing pool to the two
nearest boundaries of the legal subdivision, as
shown and marked 2 on Appendix D hereto
attached, or

- 7 -

(b) if the well is completed within the drilling
spacing unit and within the North-west quarter
of the legal subdivision other than that
containing the target area, 0.50 times the area
of the drilling spacing unit, as shown and
marked 3 on Appendix D hereto attached, or

(c) if the well is completed within the drilling
spacing unit and within the South-east,
South-west or North-east quarter of the legal
subdivision other than that containing the
target area, four times the product of the
perpendicular distances from the uppermost point
of intersection of the wellbore with the oil
productive or gas productive part, as the case
may be, of the producing pool to the two nearest
boundaries of the legal subdivision in which the
well is completed, as shown and marked 4 on
Appendix D hereto attached,

to the area of the drilling spacing unit.

9e Where the drilling spacing unit established is one
legal subdivision and the well is completed outside the
North-west quarter of the legal subdivision, its base
allowable or in the case of a gas well, its annual allowable,
shall be reduced by application of the factor equivalent to
the ratio of the area four times the product of the
perpendicular distances from the uppermost point of
intersection of the wellbore with the oil productive or gas
productive part, as the case may be, of the producing pool to
the two nearest boundaries of the legal subdivision, as shown
and marked 2 on Appendix E hereto attached, to the area of the
drilling spacing unit,

10. Board Order No* SU 1040 is rescinded*

11* This order comes into force on September 1, 1981.

MADE at the City of Calgary, in the Province of
Alberta, this 10th day of August, 1981.

ENERGY RESOURCES CONSERVATION BOARD

V. Millard
Chai rman

Digitized by the Internet Archive
in 2015

https://archive.org/details/energyresources19812328

APPENDIX A TO ORDER NO. SU 1088

List of Pools Exempt from Spacing Changes

Heavy Pools

Heavy Pools

Amisk Blairmore A
Amisk Blairmore B
Bigoray Pekisko A
Blueridge Pekisko A
Bolloque Upper Mannville A
Bonnyville Colony

Hayter Sparky A
Hayter Sparky E
Hayter Dina A
Hayter Dina B
Marwayne Sparky A
Morgan Sparky A

K 1 :

lie Colony B

Morgan Lloydminster A

Mannville A

Paddle River Rundle

Mannville B

Plain Colony E

South

Sparky

E

Provost Upper Mannville B

South

Sparky

H

Provost Upper Mannville BB

South

Sparky

I

Provost Basal Quartz A

South

Sparky

P

Ribstone Sparky B

South

Sparky

A & B

Vermilion Sparky A

South

Sparky

N & R

Viking-Kinsella Wainwright

D

South

L 1 0 y d m i n s t e r

A

Viking-Kinsella Wainwright

H

South

Lloydmins t er

C

Wainwright Colony V & Colony

South

Lloydmins ter

D

Wainwright Sparky B

Cherhill Banff B
Cherhill Banff C
Compeer Lower Mannville A
David Lloydminster A
Greencourt Pekisko A
Gunn Banff A
Harold Lake Colony

Wainwright Sparky F
Wainwright Wainwright
Warwick Upper Mannville J
Warwick Upper Mannville V
Wildmere Lloydminster A
Wrentham Lower Mannville C
Wrentham Lower Mannville E

- 2 -

APPENDIX A TO ORDER NO. SU 1088
List of Pools Exempt from Spacing Changes

Medium and Light Pools

Acheson Blairmore A
Acheson Blairmore 0
Acheson D-3 A
Alix D-2

Alliance Blairmore
Armisie Blairmore
Battle Viking
Bellshill Lake Viking A
Bellshill Lake Blairmore
Bonnie Glen Cardium A
Bonanza Boundary A
Bonanza Boundary B
Buffalo Lake D~3 B
Namao Blairmore F
Campbell-Namao Blairmore J
Caroline Cardium E
Caroline Viking A
Caroline Viking G
Chain Viking A
Chamberlain Blairmore
Cherhill Banff A
Chigwell Viking A
Chigwell Viking B
Chigwell Mannville E
Chigwell Mannville G
Chigwell Upper Mannville A
Chigwell D-2 C

Medium and Light Pools

Chigwell D-3 A

Clive D-2 A

Clive D-3 A

Crossfield Rundle C

Crossfield Rundle G

Crossfield East Cardium C

Crossfield East Elkton A

Crossfield East Elkton D

Davey Belly River B

Davey Pekisko A

Duhamel Wabamun A

Duhamel D-3 A

Duhamel D-3 B

Eaglesham D-3 A

Edson Cardium B

Edson Cardium C

Edson Cardium J

Edson Cardium K

Edson Bluesky B

Erskine Blairmore F

Erskine D-3

Ewing Lake D-2 D

Excelsior Mannville A

Fairydell-Bon Accord Basal Mann C

Fenn-Big Valley D-2 A

Fenn West D-2 A

Ferrier Cardium D

- 3 -

APPENDIX A TO ORDER NO « SU 1088

List of Pools Exempt from Spacing Changes

Medium and Light Pools

Ferrier Cardium G
Ferrier Cardium K & L
Ferrier Cardium NB & Viking A
Garrington Cardium D
Garrington Cardium A & B
Garrington Viking A
Garrington Viking B
Garrington Mannville B
Garrington Lower Mannville I
Ghost Pine Upper Mannville Q
Ghost Pine Upper Mannville V
Ghost Pine U, Mannville CGHP&U
Gilby Belly River B
Gilby Viking A

Medium and Light Pools

Golden Spike D-3 C
Halkirk Lower Mannville C
Harmattan East Rundle
Harmattan Elkton Rundle B
Haynes D-2 A & D-3 A
Highvale Lower Mannville A
Highvale Banff A
Highvale Banff B
Innisfail D-3
Joarcam Viking
Jof f re Viking
Joffre South Viking
Lanaway Cardium
Lanaway Mannville

Gilby Viking E

Lanaway Elkton

A

Gilby Basal Mannville

B

Leduc-Woodbend

Blai

rmor e

A

Gilby Basal Mannville

S

Leduc-Woodbend

Blai

rmor e

B

Gilby Basal Mann H&L,

JUR E

Leduc-Woodbend

Blai

rmor e

E

& UM A

Leduc-Woodbend

Blai

rmor e

J

Gilby Rundle B

Leduc-Woodbend

Blai

rmor e

K

Gilby Rundle E

Leduc-Woodbend

D-3

E

Gilwood Gilwood A

Legal Middle Viking

A

Giroux Lake Cadomin A

Legal Mannville

B

Golden Spike D-2 A

Leo Lower Mannville

A

Golden Spike D-3 A

Lone Pine Creek

D-2

A

Golden Spike D-3 B

Lone Pine Creek

D-3

A

- 4 -

APPENDIX A TO ORDER NO. SU 1088

List of Pools Exempt from Spacing Changes

Medium and Light Pools

Markerville Viking A
Markerville Pekisko B
McLeod Cardium A
Medicine River Glauconitic A
Med River Glauc D & Ostracod M
Medicine River Ostracod A
Medicine River Ostracod B
Medicine River Ostracod C
Medicine River Ostracod G
Medicine River Ostracod M
Medicine River Basal Quartz B
Medicine River Basal Quartz C
Medicine River Basal Quartz D
Medicine River Basal Quartz J
Medicine River Pekisko N
Medicine River Pekisko R
Mikwan Upper Mannville F
Mikwan D-2 A
Mikwan D-3 A

Minnehik-Buck Lake Cardium A
Minnehik-Buck Lake Cardium D
Minnehik-Buck Lake Cardium F
Minnehik-Buck Lake Viking A
Minnehik-Buck Lake Ostracod A
Morinville Lower Mannville A

Medium and Light Pools

Morinville D-3 B

Morinville D-3 C

Nevis Blairmore B

Nevis Blairmore C

Nevis Upper Mannville A

Nevis Devonian

New Norway D-2

New Norway D-3

Niton Basal Quartz A

Niton Basal Quartz B

Normandville Mississippian A

Normandville Mississippian B

Normandville Mississippian C

Olds Wabamun A

Peavey Blairmore

Pembina Keystone Belly River B
Pembina Keystone Belly River C
Pembina Belly River J
Pembina Keystone Belly River L
Pembina Keystone Belly River U
Pembina Belly River II
Pembina Belly River KK
Pembina Belly River YY
Pembina Belly River FFF & GG
Pembina Cardium

- 5

APPENDIX A TO ORDER NO. SU 1088

List of Pools Exempt from Spacing Changes

Medium and Light Pools

Pembina Lobstick Glauconitic A

Pembina Ostracod E

Pembina Keystone Ellerslie A

Pembina Pekisko A

Penhold Viking A

Penhold Lower Mannville A

Pouce Coupe South Boundary A

Pouce Coupe South Boundary B

Provost Viking CAK & Mannville

Provost Blairmore

Provost Mannville H

Provost Mannville I

Provost Mannville L

Redwater Lower Viking A

Redwater Lower Viking B

Redwater Basal Mannville D

Rowley Pekisko A

Rowley Lower Mannville A

Stettler D™2 A

Stettler D-3 A

Stettler North Upper Mannville
Sturgeon Lake South D-2 A
Sunset Triassic A
Sunset Triassic B
Sylvan Lake Viking A

Medium and Light Pools

Thompson Lake Blairmore
Three Hills Creek Pekisko
Turner Valley Blairmore A & B
Turner Valley Rundle
Twining Lower Mannville B ,
Twining Rundle A & Low Man A
Twining North Rundle
Whitemud Blairmore
Willesden Green Card A
Willesden Green Viking A
Willesden Green Viking B
Wimborne D-2 A
Wimborne D-2 B
Wood River D-2 A
Wood River D-2 C
Worsley Triassic A
Youngstown Upper Mannville A
Youngstown Arcs

1600 m

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PRIMARY TARGET AREA

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THE PROVINCE OF ALBERTA

APPENDIX B TO ORDER NQ SU 1088

AREA OF CHANGE FROM PREVIOUS ORDER-

EFFECTIVE DATE —SEPTEMBER I, 198!

ENLRGY RtSOi'RCfcS CONSERVATION BOAR:
CALGARY ALBERTA

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THE PROVINCE OF ALBERTA

APPENDIX C TO-ORDER NO. SU 1088

AREA OF CHANGE FROM PREVIOUS ORDER EZZZID
EFFECTIVE DATE -SEPTEMBER I, 198!

tNLRGV Rt.SOiiRCES ^ONStRVATiC
CALGARY ^ALBERTA

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THE PROVINCE OF ALBERTA
APPENDIX D TO ORDER NO. SU 1088

AREA OF CHANGE FROM PREVIOUS ORDER -
EFFECTIVE DATE —SEPTEMBER I, 1981

tNtRoV RtbOURCEb CONSERVATION
CALGARY ALBERTA

1600 m

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TARGET AREA

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AREA OF DRILLING SPACING UNIT^ ASU = 400m X400m

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THE PROVINCE OF ALBERTA

APPENDIX E TO ORDER NO. SU 1088

AREA OF CHANGE FROM PREVIOUS ORHFR -
EFFECTIVE DATE -SEPTEMBER 1 , 1981

ENERGY RESOURCES CONSERVATION BQARU
CALGARY ALBERTA

(

SEP -2 1981

ENERGY RESOURCES CONSERVATION BOARD

Calgary Alberta

Informational Letter
IL 81-24

TO: All Oil and Gas Operators
Major Gas Purchasers

OILFIELD SOLUTION GAS CONSERVATION

The purpose of this informational letter is to review the Board's policies
respecting solution gas conservation, including gas conservation (GC)
orders, voluntary solution gas conservation schemes, the Board's flaring
surveillance and follow-up activities, and applications for exemption from
GC orders.

On the basis of the recent numerous inquiries to its Gas Department and
area offices, the Board believes that the following information will be
useful to industry and others.

GC ORDERS AND VOLUNTARY GAS CONSERVATION SCHEMES

The practice of gathering and conserving oil field solution gas has long
been accepted in the petroleum industry as a wise principle of resource
management. Moreover the regulatory provisions for requiring such con-
servation and thereby preventing waste of the resource are explicitly set
out in section 37, subsection (b) of The Oil and Gas Conservation Act.
During the course of the past 25 years, solution gas conservation schemes
have been installed in virtually all major operating oil fields leaving
only the minor remnant extensions or isolated developments in which flaring
continues. In reaching the current status, many of the solution gas
conservation schemes were implemented on a voluntary basis by operators
whereas in a few cases, the schemes were established only after the Board
had enacted a GC order pursuant to section 37 of The Oil and Gas Conservation
Act. In either case, the Board has issued GC orders to reflect a maximum
permissible level of flaring that individual operators would be allowed to
incur in the respective fields. These GC orders and the specified flaring
allowances are listed in Attachment 1.

In order to ensure that the maximum feasible solution gas conservation is
being achieved, the Board staff maintains a continuing surveillance of the
amounts of flaring that are occurring in oil fields throughout the province
including those already subject to GC order standards as well as newer
fields for which gas gathering systems have not yet been established. For
these newer fields and extensions to existing fields, if the Board staff's

2

preliminary assessment indicates that gas conservation appears to be
economically viable, it immediately advises the operator of its conclusion
and of its expectation that the operators in that area should proceed with
a conservation scheme. If the operators fail to submit application for
the scheme or also fail to demonstrate that solution gas conservation is
not economically feasible, the Board, under the provisions of section 37
would call a hearing to permit the operators to show cause why they should
not be required to install a gas gathering conservation facility. Where a
GC order is issued pursuant to such a proceeding, all of the gas produced
in the field to which the order is applicable must be conserved unless
exception to that requirement is obtained.

FLARING SURVEILLANCE IN GC ORDER AREAS

On a monthly basis, the Board compares the level of flaring which has
occurred at facilities in GC order fields with the level which the order
allows. Where flaring at a particular facility has exceeded the GC order
limit, the Board requires the operator, usually on a quarterly basis, to
explain the reasons for the excessive flaring and to discuss steps which
will be taken to reduce or eliminate flaring in the future. Some operators,
on their own initiative, provide the Board with monthly or quarterly flaring
summaries containing the information which would otherwise be requested.
The Board encourages this practice since it usually negates the need for the
Board to issue a letter requesting the information, and generally streamlines
the Board's surveillance and follow-up procedures.

LEVELS OF FLARING ALLOWED

With respect to the levels of flaring provided by the GC orders, the Board
notes that, while the most common allowance is 5 per cent, they range from
2 to 20 per cent depending on the nature of the operations in the particular
field(s) and the time of which the order was issued. The Board suspects
that, having regard for the changing gas and co-product prices, flaring
allowances in some GC orders may no longer be appropriate, and in this regard
intends to review the flaring allowances in all GC orders in the coming months.

APPLICATIONS FOR EXEMPTION FROM GC ORDERS
Long-Term Exemption

An application for long-term exemption from a GC order must include
projections of volumes of gas produced, the co-product content of the gas,
expected ranges of prices for residue gas and co-products, capital and

3

operating costs and other factors such as environmental impact of continued _

flaring. Special attention should be given to forecast changes in prices
and costs and also to long-range cumulative amounts of flaring that may
occur in the absence of a scheme.

Attachment 2 hereto outlines the information normally required in an
application for long-term exemption or in a submission requested by the
Board staff on the feasibility of gas conservation. In some cases, less
information would be acceptable, such as where the produced gas volumes
are extremely small and are remote from markets or a sales gas gathering
system. The Board believes that an appropriate time to apply for long-term
exemptions for new facilities would be at the time an application is
submitted to the Board's Development Department for approval of the battery
facilities under section 15.210 of the Oil and Gas Conservation Regulations.
In the event that conservation of gas may occur at some later date, this
should be a consideration when locating and designing the battery, and )
therefore, should be addressed in the initial battery application.

Short-Term Exemptions

GC orders provide for a modest level of flaring to accommodate upsets,
maintenance and repairs, and other expected incidents which can result
in flaring. When an unexpected incident occurs or where extensive main-
tenance or repairs are required and flaring in excess of the GC order
limit would result, the Board may approve, upon application by the operator,
a short-term exemption from the GC order so that oil production may continue.
Where possible, such as in the case of planned maintenance, the application
should be in writing, although verbal applications will be accepted if the
circumstances warrant. The Board expects that operators would examine
whether exemption is required or whether the level of flaring already
permitted by the GC order would accommodate the situation. In the interests
of conserving these diminishing resources, the Board would expect operators
to examine alternatives to flaring such as shutting in and rescheduling
oil production, shutting in high GOR oil wells, reinjection of solution
gas where facilities exist, expediting the delivery of new or additional
required equipment, and expediting the carrying out of maintenance and
repairs. Also, the Board notes that its practice is to give favourable
consideration to waiving production penalties resulting from making up
oil production where shut-in was required to facilitate gas conservation.

SOLUTION GAS PURCHASING

With the current gas supply situation in Alberta, it is understood that
occasionally an operator has experienced difficulty in obtaining a contract
for his solution gas. Today no legislation exists which would enable the
Board to compel a purchaser to take solution gas. However, there has been
an understanding between the Board and the purchasers which generally
provides that the purchaser "in the area" will take new solution gas volumes.
The agreement has worked reasonably well thus far although there have been

4

a few problems from time to time. Should an operator experience problems
in contracting for the sale of solution gas, the Board is prepared to assist
in arranging discussions towards establishment of arrangements for taking
the gas and thus preventing unnecessary waste of the resource.

Any questions respecting solution gas conservation should be directed to
the Board's Gas Department.

DATED at Calgary, Alberta, on 20 August 1981.

Attachments

ATTACHMENT 1 TO XL 81-24
GAS CONSERVATION ORDERS

Order % Flare

No. Field Allowance

23 Acheson 5

62 Acheson East 5

51 Alix 10

63 Ante Creek 8
56 Bantry 10
85 Bigoray 5

24 Bonnie Glen 2

82 Brazeau River 5
72 Campbell-Namao 3

25 Carson Creek North 10

26 Cessford 5

52 Clive 10
68 Countess 4

83 Cyn-Pem 5
80 Davey 5

70 Duhamel 4
58 Erskine 5

27 Fenn Big Valley 20
60 Ferrier 5
75 Garrington 5
65 Gilby 7

28 Glen Park 2

29 Golden Spike 2

30 Harmattan East 2

31 Harmattan-Elkton 3
79 Highvale 5

32 Homeglen-Rimbey 10

33 Hussar 2

34 Innisfail 2

71 Joarcam 4
67 Joffre 4

35 Judy Creek 5

Order % Flare

No. Field Allowance

36 Kaybob ' 2
50 Kaybob South 2

37 Leduc-Woodbend 2
66 Medicine River 7
59 Mitsue 3 ,.

77 Nipisi 6
57 Olds 5

38 Pembina 5
64 Provost 10
69 Rainbow 4

73 Rainbow South 4

39 Redwater 2
76 Ricinus 4
55 Simonette 5

40 Stettler 10

41 Stettler South 20
81 Sturgeon Lake 4
49 Sturgeon Lake South 10
54 Sundre 3

42 Swan Hills 8

43 Swan Hills South 6

44 Turner Valley 15

74 Twining 5
61 Twining North 3

78 Utikuma Lake 6

45 Virginia Hills 6

46 Westerose 3
84 Westpem 5
53 Westward Ho 15

47 Willesden Green 10

48 Wizard Lake 2

ATTACHMENT 2 TO IL 81-24

Long-Term Flaring

Applications for long-term exemption from a Gas Conservation Order shall
include the following information:

a a forecast on an average daily basis by years of the
oil production and gross and net gas and co-product
production for the period of exemption;

b a complete summary of the facilities and related

capital investment that would be required to conserve
the gas and co-products, if any;

c the annual cost of operating the said facilities;

d a forecast of gas and co-product prices for the
period of exemption;

e an economic evaluation showing the project rate of

return based upon the foregoing data. The evaluation
should show the return before income tax as well as
the return after income tax assuming the prevailing
corporate tax rate for the applicant at the time of
application. The evaluation should also identify the
payout period for the project under both circumstances;
and

f any other data that may be pertinent.

SEP » 2 1-

ENERGY RESOURCES CONSERVATION BOARD
Calgary Alberta

Informational Letter
IL 81-25

TO: All Oil and Gas Operators . ■ '

REVISIONS TO OIL ALLOWABLES - SEPTEMBER 1981 MD ORDER

As a result of the revisions to the oil allowable control systems
outlined in Informational Letter IL 81-12 the Board's MD Order
for September 1981 reflects changes in maximum rate limitations
(MRL) for many pools.

In pools where the PRL surveillance formula is being used to
determine the MRL, the formula outlined in IL 81-12 has been
applied. Because the PRL formula approach is intended for
initial MRL determinations, it is emphasized that many of the
developed pools could benefit from studies to more adequately
determine rate controls.

The MRL for those pools that were based on past studies and
considerations have been retained. These are listed in the
attached appendix.

DATED at Calgary, Alberta on 27 August 1981.

N. G. Berndtsson
Assistant Manager,
Oil Department

Appendix
IL 81-25

POOLS WITH MRLs BASED ON PAST STUDIES AND CONSIDERATIONS

^MRL
m /day

Acheson D-2A . 31.8

Ante Creek Beaver Hill Lake - Solvent Flood 397.3
Bonnie Glen D-3A 22 247.4

Buffalo Lake D-3 ' 176.8

Buffalo Lake D-3B S 60.6

Caroline Elkton B 11.9

3

Coutts Moulton A - Primary 8.9 m /d/well-

- Waterflood ' , 89.0

Crossfield Rundle C 20.0

3

Cyn-Pem Cardium C 20.0 m /d/well

Eaglesham D-IA 15.3 >

Ewing Lake D-3A 57.8

Joarcam Viking - Primary (Township 50) 20.8 m"^/ d/well (16 ha DSU)

Leduc-Woodbend D-3F 186.3

3

Mitsue Gilwood A - Primary 10.0 m /d/well

3

Provost Upper Mannville B 9.5 m /d/well

Rainbow Keg River X 47.7 - ^

3

Rivercourse Sparky A . 5.4 m /d/well

Shekilie Keg River L ' 19.0

Shekilie Keg River M 25.0

Shekilie Keg River N 19.0

St. Albert-Big Lake D-2A > 59.3

St. Albert-Big Lake D-3A 619.2

Sturgeon Lake D-3 776.3

Sundre Rundle B - Waterflood 85.8

Virgo Keg River Z (I.S. No. 6) 31.8

Virgo Keg River QQQ 19.1

Virgo Keg River RRR 14.3

Virgo Keg River C2C 11.9

Virgo Keg River F2F (I.S. No. 7) 6.4

Appendix
IL 81-25

m /day

Virgo Keg River K2K

Virgo Keg River 020

Wembley Halfway B

Windfall D-3C

Wintering Hills Viking A

Wizard Lake D-3A - Solvent Flood

Yekau Lake D-3A

28.6
7.9

11.7 m~^/d/well
" 25.0
63.6
15 891.0
120.1

Zama

Muskeg 0

8.7

Zama

Keg

River

S

46.1

Zama

Keg

River

VV

96.9

Zama

Keg

River

WW

15.9

Zama

Keg

River

XX

31.8

Zama

Keg

River

KKK -

Waterf lood

19.1

Zama

Keg

River

000

10.3

Zama

Keg

River

TTT -

Waterf lood

13.1

Zama

Keg

River

E2E

15.1

Zama

Keg

River

J2J

21.4

Zama

Keg

River

S2S

31.5

Zama

Keg

River

F3F

9.3

Zama

Keg

River

P3P

15.9

Zama

Keg

River

C4C

11.9

Zama

Keg

River

G4G

13.5

Zama

Keg

River

H4H

28.6

Zama

Keg

River

R4R

20.7

ENERGY RESOURCES CONSERVATION BOARD

Calgary Alberta

Informational Letter
IL 81-26

a

TO: All Oil and Gas Operators

INCENTIVE EXPLORATORY WELLS: ^
PRELIMINARY APPRAISALS BEFORE LICENSING

This letter supersedes Informational Letter IL-OG 79-1, issued on
3 January 1979 and relating to the Exploratory Drilling Incentive
Regulation, 1978.

As all preliminary appraisals now relate to the Exploratory Drilling
Incentive Regulation, 1981, the service is described below in the context
of that regulation. No procedural change has been adopted, but the fee
has been increased from $25 to $35 to offset the increased cost of
providing this service.

• An operator may, in writing, ask whether or not either a hydro-
carbon occurrence penetrated between specified depths in a named
nonconfidential well, or a crude bitumen occurrence at a particular
location, is deemed by the Board to constitute a "significant
occurrence of crude oil or gas" or an "oil sands deposit" within
the meaning of section 9(b) and (c) and Schedules J and K of the
Exploratory Drilling Incentive Regulation, 1981. A fee of $35
will be charged for each hydrocarbon or crude bitumen occurrence
appraised.

• An operator may also ask, in writing, whether or not a specific
well is inside or outside the "4.8 kilometre area" or "2.4 kilometre
area" associated with the anticipated incentive exploratory well.
Such an inquiry should specify the legal descriptions and the
known and expected bottom hole co-ordinates of both the existing
well and the anticipated incentive exploratory well. A fee of

$35 will be charged for performing each distance determination
associated with this type of an inquiry.

All operators are reminded that the Board is not obligated to honour
a preliminary appraisal for an anticipated incentive exploratory well
when it officially determines or redetermines the qualifying interval
pursuant to section 6(1) (a) or section 7(3), respectively, of the
regulation. The preliminary appraisal may be deemed invalid where
circumstances change before the official determination is made, where
additional information is obtained, or where an error in the appraisal
is later detected.

2

Please direct each written request for a preliminary appraisal to
the Board's Geology Department and, if you have a question regarding
the service, you may phone Mr. B, T. Shirvell (261-8227) or
Mrs. Margaret Carroll (261-8398).

DATED at Calgary, Alberta, on 28 August 1981.

SEP 17198

ENERGY RESOURCES CONSERVATION BOARD

Calgary Alberta

Informational Letter
IL 81-27

TO: All Oil and Gas Operators

INCENTIVE EXPLORATORY WELLS DRILLED UNDER THE
EXPLORATORY DRILLING INCENTIVE REGULATION, 1978, AND
EXPLORATORY DRILLING INCENTIVE REGULATION, 1981

Effective immediately, this letter supersedes Informational Letter
IL 80-13 (IL 80-13) issued on 25 June 1980.

This letter updates IL 80-13 by providing for incentive exploratory
wells drilled under the Exploratory Drilling Incentive Regulation, 1981
(the 1981 regulation), and by defining, in section 3.3 (c) and (d), two
rules adopted by the Board subsequent to the issuance of IL 80-13.
Certain wording appearing in IL 80-13 relates exclusively to the
Exploratory Drilling Incentive Regulation, 1978 (the 1978 regulation).
Most of that wording is being retained in this letter because it will
continue to apply for several more months while wells drilled under the
1978 regulation are being processed.

To obtain a full description of all Board'-administered aspects of the
Exploratory Drilling Incentive System, this letter should be reviewed in
concert with the 1978 and 1981 regulations, copies of which are available
from the Department of Energy and Natural Resources, and Informational
Letter IL 81-26 which refers to the service offered by the Board in
conducting a preliminary appraisal before a potential incentive
exploratory well is licensed.

1 DEFINITIONS

In this informational letter,

(a) "abandoned well" means

(i) a well that was drilled and forthwith abandoned and that,
in the opinion of the Board, does not warrant being cased
for production, or

(ii) a well that once produced crude oil or gas but was
abandoned before 1 January 1974;

(b) "completed well" means

(i) a well that has been or is cased or completed for

production except where such a well had been produced and
abandoned before 1 January 1974, or

(11) a well that, in the opinion of the Board, penetrated a
zone that warrants being cased for production, or

(iil) an evaluation well that, in the opinion of the Board,

penetrated a zone that would have warranted being cased

for production if the well had been drilled as a conventional

well;

"incentive exploratory well" means a well certified by the Board
as an incentive exploratory well under either the 1978 or 1981
regulation;

"pre-existing well" means

(I) a well drilled under a certificate issued before the date
and time at which the incentive exploratory well was
certified, or

(II) an uncertified well that was spudded before the date and
time at which the incentive exploratory well was certified;

"Class A interval" and "Class B interval" mean the respective
intervals of depth of an incentive exploratory well that qualify
for credit considerations under Schedules F and G of the 1978
regulation or Schedules J and K of the 1981 regulation, depending
on which regulation is applicable;

"qualifying interval" means the total Class A interval and/or
Class B interval determined by the Board at an incentive
exploratory well;

"significant occurrence of crude oil or gas" and "accumulation of
crude oil or gas" mean

(1) the deepest hydrocarbon occurrence penetrated by a "completed
well" as defined under clause (b) , subclause (1), above, or

(ii) the deepest hydrocarbon occurrence penetrated by a well
that had been produced and abandoned before 1 January 1974,
but not including the crude oil or gas accumulation which
yielded this production, or

(iii) the hydrocarbon occurrence represented by the zone referred
to in clause (b) , subclauses (ii) and (iii), above;

"4.8-kilometre area" means the area of a circle, having a radius
of 4.8 kilometres, that is centred at the bottom-hole location
of the incentive exploratory well; and

3,

(i) "2. A-kilometre area" means the area of a circle, having a radius
of 2.4 kilometres, that is centred at the bottom^^hole location
of the incentive exploratory well.

2 CERTIFICATION OF AN INCENTIVE
EXPLORATORY WELL

The Board will certify a well to be drilled for oil or gas that, at the
time of licensing or certificate renewal, satisfies condition (a), below,
and either condition (b), (c), or (d) :

(a) intended to be drilled deeper than 600 metres, and

(b) located more than 4.8 kilometres from any pre-existing well that
penetrated a significant occurrence of crude oil or gas, and
situated at a location where, in the opinion of the Board, no oil
sands deposit exists, or

(c) located less than 4.8 kilometres from a pre-existing well that
penetrated a significant occurrence of crude oil or gas, but
intended to be drilled at least 150 metres below the base of the
deepest significant occurrence of crude oil or gas, or

(d) situated at a location where, in the opinion of the Board, an oil
sands deposit exists, but intended to be drilled to explore for
crude oil or gas at any depth below the deepest member or
formation containing the oil sands deposit.

3 DETERMINATION OF INTERVALS OF DEPTH
QUALIFYING FOR CREDIT

For each incentive exploratory well, the total interval that qualifies
for credit considerations will be determined and classified into the
Class A and/or Class B categories, in accordance with the following
procedures. These procedures are illustrated by Figure 1.

3.1 Total Qualifying Interval

(a) If no pre-existing well that penetrated a significant occurrence
of crude oil or gas is in the 4.8-kilometre area, the qualifying
interval will be the interval extending from the total depth of
the incentive exploratory well up to the depth of either 609.6 or
600 metres, depending on whether the 1978 or 1981 regulation
applies .

(b) If a pre-existing well that penetrated a significant occurrence
of crude oil or gas is in the 4.8-kilometre area, the qualifying
interval will be the interval extending from the total depth of
the incentive exploratory well up to the deepest of :

CASE 1 CASE 2 CASE 3

i " 1 ' * 1 j

1 !e««P.MK»| 1

j jNCENTtVE S
^ ^ PROGRAM 1^ S

I 1
! 1

\

1 \ \

CLASS 1 1 1

\\\ 1

'a ASS 1 j "i

)' i ! i

1 CLASS S !

if ll
ill If

\ j

clUss

' i
1 1

! 1

1 1

CASE ^
JEW

I

609.6 !600}m

I !

,CIASS

COMPLETED
WELL

!

LEGEND

ASANOONEDn

WELL U

INCENTIVE
EXPLORATORY
WELL

iEW

1

DEEPEST SIGNIFICANT OCCURRENCE OF CRUDE

0!L OR GAS - - - -

609.6

^A !52.4m --APPLICABLE TO lEW'S DRILLED
JNDER THE 1978 REGULATION

600 and ISO m

APPLICABLE TO lEW'S DRILLED
UNDER THE 1981 REGULATION

FIGURE I DETERMINATION OF CLASS A AND CLASS B INTERVALS

RESOURCES CONSERVATION
ALBERTA, CANADA

[ENERGY RESOURCES CONSERVATION BOARD
\J ALBERTA, CANADA

ENERGY RESOURCES CONSERVATION BOARD

Calgary, Alberta

Informational letter
IJ. 81-28

TO: All Oil and Gas Operators

In order to issue the Board's January 19^2 MD Order on 21 December
1981, the Board requests that applications for the following be
submitted no later than 4:00 p,m. on 4 December 1981.

Production Spacing Units

Blocks

Projects

No applications for 1 January 1982 approval will be accepted after
the deadline.

DATED at Calgary, Alberta on 12 November 1981
ENERGY RES^RCES CONSERVATION BOARD

:aff Supervisor
T^roration Services
Oil Department

VO/ds